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If a property owner chooses to sell, the financial statements provided with the listing frequently serve as the link between the seller’s goals and the buyer’s trust

A clear, accurate, and well‑arranged set of statements can hasten the sale, ease negotiation friction, and help the seller obtain the highest possible price

Below is a practical guide to preparing those financial statements, from the basics of what to include to the nuances of tax and regulatory compliance

1. Understand the Audience

The first step involves determining who will view the statements

Potential buyers include individual investors, homebuyers, institutional lenders, and real‑estate investment trusts (REITs)

Although the core information stays consistent, the depth and format can vary

For instance, a real‑estate developer seeks detailed cash‑flow projections, while a private buyer may concentrate on historic rent rolls and maintenance costs

Customize the presentation to align with the expectations of your target buyer group

2. Collect Essential Data

Accumulate the following key data sets, ensuring you have records spanning at least the last 12–24 months

Purchase price history along with major capital improvements

Present and past rent rolls, including tenant names, lease start

Operating expense records: utilities, taxes, insurance, property management fees, repairs, and capital reserve contributions

- Mortgage statements and loan amortization schedules, if applicable

Tax returns, including property and income, for the past few years

- Insurance policies and any claims history

Any pending litigation or zoning concerns

A complete data set lowers the risk of surprises during due diligence

3. Pick the Correct Statement Types

You’ll need to produce at least three essential statements for a property sale

Income Statement (Profit & Loss) demonstrates operating income, expenses, and net operating income (NOI)

- Balance Sheet – Provides a snapshot of assets, liabilities, and equity at a point in time

- Cash Flow Statement – Illustrates the inflow and outflow of cash, especially useful for buyers evaluating financing options

In addition, consider adding a Rent Roll Summary, a Capital Expenditure (CapEx) Log, and a Tax Summary

These supplemental documents help buyers dig deeper without overwhelming them with raw data

4. Construct the Income Statement

Begin with gross rental income: total rent collected during the period

2. Subtract vacancy and credit losses: estimate a realistic vacancy rate (often 5–10% for commercial properties; 2–5% for residential) and any bad‑debt write‑offs

3. Deduct operating expenses: utilities, taxes, insurance, maintenance, property management, marketing, and any other recurring costs

Determine Net Operating Income (NOI): the amount left after operating expenses but before debt service and taxes

Deduct any debt service (principal and 名古屋市東区 空き家 売却 interest payments)

Include or exclude any non‑operating income or expenses (for example, sale of equipment, one‑time legal fees)

Conclude with Net Income: the figure that shows profitability after all costs

Show the income statement in a clear, columnar format with amounts in the primary currency

Insert footnotes for any unusual items or one‑time expenses

5. Create the Balance Sheet

Assets:

Current assets include cash, accounts receivable, security deposits held in escrow

- Fixed assets: property's fair market value, less accumulated depreciation (show the depreciation schedule if the property is depreciable)

Other assets: intangible assets like leasehold improvements

Liabilities:

- Current liabilities: accounts payable, accrued expenses, short‑term debt

Long‑term liabilities include mortgage balances, deferred tax liabilities

Equity:

Owner’s equity includes purchase price, retained earnings, and any capital contributions

Make sure that assets equal liabilities plus equity

Provide a brief narrative explaining significant items, such as pending appraisals or lease renewals

6. Draft the Cash Flow Statement

Segment the cash flows into three categories

Operating activities: cash from rents less operating cash outflows

- Investing activities: cash spent on capital improvements, purchase or sale of ancillary assets

- Financing activities: mortgage payments, new debt issuance, or equity injections

Illustrate how cash balances evolve over the reporting period and emphasize any periods of negative cash flow that could be a warning for buyers

7. Draft the Rent Roll Summary

Enumerate each tenant, lease start and end dates, rent amount, escalation terms, security deposit, and any other special clauses

Highlights:

The current occupancy rate

How close leases are to expiration

- Rent growth trajectory over time

A clear rent roll can reassure buyers regarding income stream stability

8. Build the CapEx Log

Add a chronological list of all major capital expenditures over the past few years: roof replacements, HVAC upgrades, parking lot resurfacing, etc.

For each entry, note the cost, date, and purpose

Buyers typically use this to gauge future maintenance needs and determine the replacement reserve

9. Outline Tax Information

Provide a concise tax summary

Property tax assessments and history of payments

Income tax returns when the property is held in a corporate structure

- Any tax credits or incentives, such as low‑income housing credits or energy‑efficiency rebates

If the sale is expected to be a gain, add an estimate of capital gains taxes

This helps buyers factor potential tax liabilities into their offer

10. Verify Accuracy and Consistency

Check all figures across the statements

For instance, the net cash inflow from the cash flow statement should reconcile with changes in the balance sheet’s cash account

Utilize a spreadsheet to automate these checks and detect discrepancies

11. Include Narrative Explanations

While figures represent part of the story, narrative context can offer clarity

Details:

Explanation of why certain expenses spiked, such as a costly roof replacement

Lease renegotiations that altered rent schedules

- Market trends influencing rental rates

A well‑written narrative can pre‑empt buyer questions and demonstrate transparency

12. Format for Readability

Stick to a simple, professional layout